Distribution BEFORE taking first SEPP Distribution
L1: Distribution BEFORE taking first SEPP Distribution
This is a little bit of a complicated question. So, thanks in advance.
I am 54 years old. I plan on establishing my SEPP plan AND take my first annual distribution sometime in February, 2012. The IRA balance I am using is as of 12/31/11. However, since 12/31/11, the balance in my IRA has risen, dramatically.
The question is: can I take a partial distribution now (that IS subject to the 10% tax) from this IRA and still use the 12/31/11 balance to establish the SEPP plan? Or, should I take the distribution (subject to 10% penalty) now and then use
the 2/29/12 IRA balance to establish my SEPP and take my first annual distribution in March, 2012.
The reason for the question is that I would have to use a max interest rate of 1.40% in March, instead of being able to use the higher 1.53% in February, in establishing the plan.
Thanks for your help.
2012-02-06 15:52, By: 72tMan, IP: [18.104.22.168]
L2: Distribution BEFORE taking first SEPP Distribution
Before your start, think about dividing the IRA into 2 accounts (each with different account numbers) and then only use one of the account for the SEPP. The balance to be used for the SEPP would be the balance after the split. You are then free to take withdrawals
from the non-SEPP account subject to the 10% without creating a problem with the SEPP.
If you do decide to use your plan, you would use the balance after the withdrawal.
Either way, you should be able to accomplish in a few days and still start the plan in February.
2012-02-06 16:06, By: Gfw, IP: [22.214.171.124]